The Federal Government has explained how it will remove the exclusion of insurance claims-handling from the Corporations Act and make it a defined ‘financial service’.
The Assistant Treasurer, Stuart Robert has told a conference of general insurers that the process will involve first removing the current exemption for claims handling from the financial services which will then have the effect of ensuring that the handling and settling of an insurance claim will be defined as a new financial service for the purposes of the Corporation Act.
“This is intended to bring the claims handling process within the definition of a financial service while mitigating any unintended consequences,” he said.
Robert said that the Government’s move was consistent with the recommendations of the Royal Commission and that the Government supported the regulation of insurance claims handling as a financial service under the Corporations Act.
“This will allow the Australian Securities and Investments Commission (ASIC) to enforce a higher standard of behaviour in the industry and ensure consumers can expect the same standard from insurers handling claims as they can from all financial service providers,” he said. “However, the Government acknowledges the industry’s concerns about the removal of the exemption. For example, some claims handling staff may be deemed as providing personal financial advice.”